SAFETY INSURANCE GROUP INC

Safety Insurance Group, Inc. operates exclusively in the property and casualty insurance market, writing business only in Massachusetts, New Hampshire, and Maine through its insurance company subsidiaries Safety Insurance Company, Safety Indemnity Insurance Company, Safety Property and Casualty Insurance Company, and Safety Northeast Insurance Company. The industry is highly competitive, with competition based on brand recognition, product quality, price, and innovation, and the company competes with other carriers for the business of independent agents. The Massachusetts personal lines insurance market is characterized by a strong independent agency channel, with independent agents accounting for approximately 68.8% of the Massachusetts personal lines insurance market measured by direct written premiums, compared to approximately 39.0% nationwide.

Safety Insurance Group is the fourth largest private passenger automobile carrier and the largest commercial automobile carrier in Massachusetts, capturing an approximate 9.4% and 13.0% share, respectively, of the Massachusetts private passenger and commercial automobile markets in 2025 according to statistics compiled by Commonwealth Automobile Reinsurers. The company is also the third largest homeowners insurance carrier in Massachusetts with a 7.0% share of that market in 2024. Nationally, Safety was ranked the 52nd largest automobile writer in the country according to S&P Global Market Intelligence, based on 2024 direct written premiums. The company sells exclusively through a network of independent agents, who numbered 797 in 1,063 locations throughout Massachusetts, New Hampshire, and Maine during 2025, and this exclusive distribution model is a stated competitive advantage. No individual agency generated more than 10.0% of direct written premiums in 2025.

Safety Insurance Group generates revenue by underwriting property and casualty insurance policies and collecting premiums, with income derived from both underwriting profit and investment returns on the premium float. The company distributes its products exclusively through independent agents, unlike some competitors who use multiple distribution channels, and does not accept business from insurance brokers except for personal automobile business assigned by the Massachusetts Automobile Insurance Plan or written through CAR's commercial automobile Servicing Carrier program. The business model is centered on maintaining strong independent agent relationships by providing a full package of insurance products and information technology services, with the goal of capturing a growing share of the total insurance business written by these agents in Massachusetts, New Hampshire, and Maine.

Private passenger automobile insurance is the company's primary product, representing 54.9% of 2025 direct written premiums at $701,420 thousand, and provides coverage for bodily injury and property damage to others, no-fault personal injury coverage, and physical damage coverage. Commercial automobile insurance represented 15.2% of 2025 direct written premiums at $194,136 thousand, offering coverage for bodily injury and property damage, no-fault personal injury coverage, and physical damage for commercial vehicles used in business, including private passenger-type vehicles, trucks, tractors and trailers excluding long-haul trucking, and insures both individual vehicles and commercial fleets. Homeowners insurance represented 25.2% of 2025 direct written premiums at $322,197 thousand, offering coverage for losses to a dwelling and its contents from numerous perils and liability coverage, written on homes, condominiums, and apartments. Business owner policies represented 2.5% of 2025 direct written premiums at $32,514 thousand, covering eligible small and medium sized commercial accounts including apartments, residential condominiums, mercantile establishments, restaurants, offices, processing and services businesses, special trade contractors, and wholesaling businesses, with equipment breakdown coverage automatically included. Personal umbrella insurance represented 0.9% of 2025 direct written premiums at $11,564 thousand, offering personal excess liability coverage over automobile, watercraft, and homeowner's insurance policies with limits of $1,000 to $5,000. Dwelling fire insurance represented 1.2% of 2025 direct written premiums at $15,006 thousand, a limited form of homeowner's policy for non-owner occupied residences. Commercial umbrella insurance represented 0.1% of 2025 direct written premiums at $1,768 thousand, an excess liability product for clients with both commercial automobile and business owner policies, with limits ranging from $1,000 to $5,000. Inland marine coverage is offered as an endorsement for all homeowners and business owner policies, providing additional coverage for jewelry, fine arts, and other items. Watercraft coverage is offered as an endorsement to homeowners policies for small and medium sized pleasure craft with maximum lengths of 32 feet, valued at less than $75, and maximum speed of 39 knots.

Safety Insurance Group has a history of profitable operations, being profitable in 44 out of 45 years since its inception in 1979. The company has dedicated significant human and financial resources to the development and deployment of advanced information systems and technologies, customer and agent facing websites, mobile applications, and customer engagement tools including online chat and text. Over the last several years, the company has modernized all of its core systems along with many surround systems and technology platforms to increase efficiencies and provide a better user experience. The company continues to expand its usage of Robotics Process Automation throughout the organization to automate manual processes, streamline the software testing process, and perform application performance testing. The senior management team has an average of over 27 years of experience with Safety. The company has filed and received approval for a number of terrorism endorsements limiting liability and property exposure according to the Terrorism Risk Insurance Act of 2002 and subsequent reauthorization acts. CAR has reappointed Safety as a servicing carrier for the Commercial Automobile Program for an additional five-year term effective January 1, 2027.

For the fiscal year ended December 31, 2025, total revenues were $1,278,605 thousand in direct written premiums, compared to $1,193,057 thousand in 2024 and $991,224 thousand in 2023. Net income was $96,995 thousand, diluted EPS was $6.56, and the company maintained a combined ratio that is typically below industry averages. The company's investment portfolio is described as high-quality, and the company has achieved profitability through operating as a leading carrier in Massachusetts, maintaining a combined ratio typically below industry averages, taking advantage of institutional knowledge, introducing new lines and forms of insurance products, investing in technology, and maintaining a high-quality investment portfolio.

A key growth vector is further penetration of the Massachusetts, New Hampshire, and Maine markets in all lines of business through maintaining and developing strong independent agent relationships. The company aims to implement rates, forms, and billing options that allow cross-selling of private passenger automobile, homeowners, dwelling fire, and personal umbrella policies in the personal lines market, and commercial automobile, business owner policies, and commercial umbrella policies in the commercial lines market, in order to capture a larger share of the total Massachusetts, New Hampshire, and Maine property and casualty insurance business written by each independent agent. The company also continues to expand its technology to enable independent agents to more easily serve their customers and conduct business with Safety, thereby strengthening agent relationships.

Another growth vector is the continued development and deployment of advanced technology and services, including modernizing all core systems and surround systems and technology platforms to increase efficiencies and provide a better user experience for employees, agents, and customers. The company positions itself to continue taking advantage of the latest InsureTech offerings, Software as a Service products, and cloud-based technologies to improve the customer experience, engage with customers on their terms, and assist with customer retention while improving operational efficiencies and reducing operational costs. The company also continues to expand its usage of Robotics Process Automation throughout the organization.

The filing does not contain specific margin trajectory, cost structure evolution, or efficiency targets with exact figures.

The filing does not contain specific supply chain posture, manufacturing capacity, technology infrastructure investment amounts, or headcount strategy details.

The filing does not contain specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy with exact figures.

The filing does not contain specific structural headwinds or execution risks explicitly flagged by management to the growth plan.

The filing does not contain specific geographic, regulatory, or macro factors management identified as constraints.

The company faces material risk from its geographic concentration, operating exclusively in Massachusetts, New Hampshire, and Maine, with Massachusetts representing $1,204,809 thousand of the $1,278,605 thousand in total direct written premiums for 2025, making the company highly dependent on the regulatory and economic conditions in that state. The company is subject to extensive regulation by state insurance departments, with the most extensive oversight from the Massachusetts Division of Insurance, and rates for personal automobile policies assigned through the MAIP are set by CAR, limiting pricing flexibility. The company's business model depends on maintaining strong relationships with independent agents, and the company must compete with other insurance carriers for the business of these agents. The company is exposed to underwriting risk from catastrophe losses, as evidenced by the use of catastrophe modeling in pricing, and from terrorism risk, for which the company has filed terrorism endorsements limiting liability according to the Terrorism Risk Insurance Act. The company's investment portfolio, while described as high-quality, is subject to market risk that could impact investment returns and overall profitability.

Management's message emphasizes the company's history of profitable operations, being profitable in 44 out of 45 years since inception in 1979, and highlights the company's strong relationships with independent agents, who numbered 797 in 1,063 locations during 2025. The strategic priorities emphasized for the period ahead are to maintain and develop strong independent agent relationships by providing a full package of insurance products and information technology services, to further penetrate the Massachusetts, New Hampshire, and Maine markets in all lines of business, and to continue to expand technology to enable independent agents to more easily serve their customers and conduct business with Safety. Management also emphasizes the experience and commitment of the senior management team, which has an average of over 27 years of experience with Safety.